The 2005 amendments to the bankruptcy code require individuals to obtain a credit counseling briefing from a state approved non profit budget and credit counseling agency. The counseling is about 1 and ½ hour and can be completed by telephone or internet. The counseling must be completed during the 180 period prior to the filing and costs approximately $50.00. The counseling is intended to assist the individual with budgeting.
An individual who is incapacitated, disabled, or on active military due in a combat zone, need not complete the briefing. Incapacity means that the person is so impaired due to mental illness or mental deficiency, that the person is incapability of realizing or making rational decisions with regard to their finances. Disability means that the person is physically impaired to the point that after reasonable effort, he is unable to participate in an in-person, telephone, or internet briefing.
After the bankruptcy filing and prior to the discharge, each bankruptcy debtor must complete an instructional course concerning financial management. The bankruptcy code allows for an exception based on the same criteria of the credit counseling briefing, that is explained above.
The bankruptcy code was amended in 2005 to include an additional criteria for bankruptcy debtors. The criteria is called the “Means Test” or “Current Monthly Income Test”. This test determines whether the debtor’s household has disposable income. The household expenses are generally limited to the allowable expenses permitted under the IRS Code. The amendments specifically allow the debtors to use as an expense actual, reasonable, and necessary expenses for the care and support of a chronically ill or disabled household member.
Additionally, the 2005 amended code provides protections from the “Current Monthly Income Test” for disabled veterans, who incurred debt primarily during a period when they were on active duty.
Please call the New Jersey bankruptcy lawyer Robert Manchel at (866) 503-5655 to discuss your bankruptcy protection options.